GBP/JPY Forecast – British Pound Bounces Against the Japanese Yen

GBP/JPY Forecast Video for 27.10.23

British Pound vs Japanese Yen Technical Analysis

The British pound has initially fallen a bit during the trading session on Thursday, showing signs of support near the ¥181 level, before bouncing rather hard. By doing so, the market looks very likely to continue to see more of the same consolidation area that we have been hanging about in. The ¥183.75 level is an area that is resistant. The 50-Day EMA slices right through the middle this area and is very flat. This suggests to me that we are going to continue to see overall sideways consolidation, therefore I think you have got a situation where we are probably going to see a lot of back and forth.

Underneath, the ¥180 level underneath is a significant support level, and of course a significant large, round, psychologically significant figure. The level being broken below would be a very negative turn of events, but right now it doesn’t look very likely to be the case. On the other hand, if we can break out to the upside, the ¥185 level is an area that a lot of people will be paying attention to, as it is a large, round, psychologically significant figure as well, and an area where we pull back from previously.

The Bank of Japan is currently trying to do everything it can to settle down the Japanese yen, but as long as they keep very low interest rates, it’s only a matter of time before the market gets what it wants, and that is a weaker Japanese yen. Yes, the potential for the Bank of Japan intervening is rather high at the moment, but they can only do so much, as they have recently shown their hand by intervening in the bond market, driving yields lower again.

Lower interest rates makes the currency very unattractive, and I do think that continues to be the case. In fact, I would not be surprised at all to see this. Go to the ¥200 level eventually, but in the meantime, it looks like we are spending most of our time digesting the massive move higher and waiting for the next fundamental momentum to jump into the market. Keep an eye on how the dollar is trading against the yen, as that’s the easiest way to measure yen relative strength or weakness. You can think of it as a “secondary indicator.”

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